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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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Hello, I have a question about an S corporation that has

Resolved Question:

Hello,
I have a question about an S corporation that has two 50/50 owners. One is the corporation president and the other secretary/treasurer. Is one owner allowed to take more from the company than the other? Also is the president allowed a company car while the other is not? Is the president allowed to get this car secretly with out the other owner knowing?
My thinking is 50/50 means it should be equal, a company car is not needed by either owner for business purposes.
Submitted: 4 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 4 years ago.
Thank you for your question.

Generally what each can take (that is, actual compensation), is based on wages and salary for each position that has to be defined in the Articles of Operation. If such wages are not defined, then each take equally or in proportion to their ownership state. So while one owner can take more from the company than the other, both have to agree that the individual is so permitted, either in writing, or via other forms of consent. The president (or secretary, as it is irrelevant here), is only entitled to what the Articles state--if there is no additional compensation provided for the specific title, the person is NOT entitled to additional benefits unless the other party so consents. Similarly he cannot get these benefits in private, that is possible embezzlement of company assets, and at the very lease the compensation for the individual should be lowered based on the value he received from those assets. This is not a good situation to be in, and it may be a good idea to discuss the future of this company and whether or not a dissolution may be necessary--once trust is gone, it is fairly tough to get back.

Good luck.
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